A problem with few solutions

Soaring education taxes are biggest villain in your annual assessment

Nancy Allan announces education funding increase for Manitoba schools by $27.2 million a 2.3 % increase for the coming year. Graph show year by year increases since 1998 . Property tax increases across Canad have increased as high as 71% Manitoba's have the lowest increase of 9.2% as seen on graph -Allan spoke at a Mb. Legislature newser - Nick Martin story - KEN GIGLIOTTI / JAN. 28 2013 / WINNIPEG FREE PRESS

If you own an average home within the boundaries of the Winnipeg School Division, you stand to pay $475 more property tax this year than you did five years ago.

The combination of a 3.87 per cent municipal property-tax hike and a proposed 6.8 per cent hike in Winnipeg School Division taxes will lead the owner of a home assessed at $233,800 -- the average residential value in Winnipeg right now -- to receive a combined property-tax bill for $3,297 this year.

That tab represents a 17 per cent jump from the $2,822 bill for the same property in 2009. Most of the extra spending -- $274 out of the additional $475 -- results from higher education taxes.

As a result, education taxes now represent 53.4 per cent of the average Winnipeg homeowner's property taxes, up from 52.7 per cent five years ago. As subtle as this shift may be, the simple fact school taxes are rising faster than municipal property taxes continues to serve as an irritant in city-provincial relations.

For decades, city council has pleaded with the province to find some way to fund education without relying on property taxes, which the city collects on behalf of school divisions. Successive provincial governments, both NDP and Tory, have dismissed the pleas as a largely cosmetic city effort to rid itself of the tax-collection duty.

The latest shift has some elements on city council up in arms again.

"Property-based taxation is an antiquated way to pay for education. It's not a property-related service," charged Transcona Coun. Russ Wyatt, city council's deputy mayor and finance chairman.

Once every spring at city hall, when council engages in a largely ceremonial debate over the collection of education taxes on behalf of the province, Wyatt trots out a Khruschev-worthy speech about the evils and indignities of "out-of-control education taxes."

Wyatt believes the province should seize control of education funding, rein in school-division spending and allow the city to collect more taxes of its own.

"The school divisions are not at fault here. School divisions are doing the best they can with the tools they have," he said in an interview, claiming the Doer and Selinger governments could have phased out school taxes over time.

"The provincial government is the one that has refused to take the bull by the horns and deal with this matter."

But the school divisions and the province see this rhetoric as entirely empty, as there is no easy way to replace the education funding collected from property owners.

"At the end of the day, there is only one taxpayer," quipped Education Minister Nancy Allan, borrowing one of Mayor Sam Katz's favourite phrases.

Across the province, property taxes accounted for about $771 million of the $1.2 billion spent on education during the most recent provincial fiscal year. The remaining education funding comes from general provincial revenues.

Replacing school taxes would require the province to hike the PST by 2.9 per cent or increase income taxes by 3.6 per cent, Allan said.

Critics such as Wyatt argue the province could come down harder on teachers' salaries, possibly by allowing them to strike.

Right now, Manitoba teachers are entitled to settle contract disputes through arbitration.

At the municipal level, workers entitled to arbitration -- police, paramedics and firefighters -- tend to be awarded the most generous wage settlements, noted Wyatt, arguing teachers should not be considered emergency workers.

"Is teaching an emergency service? I think the majority of the public would probably say no," Wyatt said.

This talk befuddles the Winnipeg School Division, where board chairwoman Rita Hildahl defends the philosophy behind the use of property taxes to fund education.

"I would think education taxes are an important contribution to the common good. I think it's great to have it spread out in a number of ways," she said.

"You hear some complaints, but not many for the number of people out there. Quite frankly, I think most people understand our system and think it's fair."

City council and school divisions are not the sole authors of the past five years of tax hikes. In 2010, a shift in the tax burden from commercial to residential properties in Winnipeg led to a de facto tax hike, even as council froze the property-tax pool that year.

A general reassessment of city properties led the average Winnipeg homeowner to pay an extra $93.24 in municipal taxes in 2010, despite the last of Katz's tax freezes. The same year, a 1.5 per cent Winnipeg School Division property-tax hike triggered $49.63 worth of additional spending.

Ultimately, the interrelationship between taxation policy, property reassessments and actual tax collection is more complex than the inter-governmental rhetoric.

Property taxes for the average City of Winnipeg residential property within the Winnipeg School Division over the past five years:

2009

Average residential property assessment: $116,600

Municipal taxes: $1,335.26

School taxes: $1,486.84

Total property-tax bill: $2,822.10

2010

Average residential property assessment: $207,548

Municipal taxes: $1,428.50

School taxes: $1,536.47

Total property-tax bill: $2,964.97

2011

Average residential property assessment: $207,548

Municipal taxes: $1,428.50

School taxes: $1,536.47

Total property-tax bill: $2,964.97

2012

Average residential property assessment: $233,800

Municipal taxes: $1,478.83

School taxes: $1,648.43

Total property-tax bill: $3,127.26

2013

Average residential property assessment: $233,800

Municipal taxes: $1,536.06

School taxes: $1,760.52

Total property-tax bill: $3,296.58

Tax hikes vs. reassessments

Additional property taxes for an average Winnipeg household within the Winnipeg School Division over the past five years:

2010

(A reassessment year)

Municipal tax hike: Zero per cent, as city council voted for a freeze.

Assessment-induced tax hike on residential properties only: 6.98 per cent, due to a shift in the tax burden from commercial properties.

School tax hike: 1.5 per cent, approved by the Winnipeg School Division board.

Assessment-induced school tax hike: 3.34 per cent, due to two factors -- a shift in the tax burden from commercial properties to residential properties, partly offset by regional differences in property-assessment increases.

Bottom line: An additional $93.24 in city taxes plus an extra $49.63 in school taxes

2011

(No reassessment)

Municipal tax hike: None. Council voted for a freeze.

School tax hike: None. The WSD board voted for a freeze.

Bottom line: No extra property taxes.

2012

(A reassessment year)

Municipal tax hike: 3.5 per cent, approved by city council.

Assessment-induced municipal tax hike: 3.52 per cent, again due to shift in the tax burden from commercial properties.

School tax hike: 7.8 per cent, approved by the WSD board.

Assessment-induced school tax hike: 7.29 per cent, due to Winnipeg School Division properties increasing in value at a rate lower than outlying properties.

Bottom line: An additional $50.33 in city taxes, plus an extra $111.96 in school taxes.

2013

(No reassessment)

Municipal tax hike: 3.87 per cent, approved by city council in January.

School tax hike: A 6.8 per cent hike has been proposed by WSD board.

Bottom line: An additional $57.23 in city taxes, plus proposed additional school taxes of $112.09

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